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4 Medical Product Stocks Likely to Top Q3 Earnings Estimates

The political gridlock over the pullback of the Affordable Care Act or Obamacare has been making headlines in the MedTech space. The MedTech space received a sudden jolt recently when White House pulled the plug on Obamacare subsidies that reduce health care costs for Americans with low incomes.

There are concerns that the final 'Trump-care plan' will still include the MedTech tax repeal in its agenda. Meanwhile, the old template of the plan, which promised to eradicate the infamous 2.3% medical device tax and the Cadillac tax (40% excise tax on high-cost healthcare plans) was not a bad deal. Amid such uproar, the question that emerges is will medical product players gain or lose.

Q3 Performance

Notably, 33 members of the total S&P 500 companies in the broader Medical sector have released their third-quarter results. The full picture is revealed in the latest Earnings Preview which suggests that stocks in the much sought-after S&P 500 Index will witness 2.3% bottom-line expansion in this reporting cycle.

Notably, there are some powerful long-term tailwinds in the medical space, including mergers & acquisitions (M&A), emerging market expansion, positive demographic trends and new product innovation. These have been a major driving force behind the sector's impressive performance over the past few quarters even amid severe socio-economic and political instabilities. Rising interest rates and the strengthening of U.S. dollar continue to act as dampeners for this industry.

How to Make the Right Pick?

With the existence of a number of industry players, finding the right stocks that have the potential to beat earnings could be a daunting task. Our proprietary methodology makes it fairly simple for you. You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP .

Earnings ESP is our proprietary methodology to determine which stocks have the best chance to surprise in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that 70% of stocks with this combination have the chance of a positive earnings surprise. An earnings beat boosts investor's confidence in the stock, which is reflected in its rapid price appreciation. You can uncover the best stocks to buy or sell before they report with our Earnings ESP Filter .

Our Choices

Below are four Medical Product players that have the right combination of elements to post an earnings beat this quarter:

GW Pharmaceuticals plc ( GWPH ) - GW Pharmaceuticals is a biopharmaceutical company focused on discovering, developing and commercializing therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. The company is based in Salisbury, UK.

We note that GW Pharmaceuticals has beaten the Zacks Consensus Estimate in two out of the trailing four quarters, with an average positive earnings surprise of 12.46%.

This Zacks Rank #3 stock has an Earnings ESP of +93.51%. The company is anticipated to report third-quarter 2017 results on Dec 4. You can see the complete list of today's Zacks #1 Rank stocks here .

MacroGenics Inc. ( MGNX ) - The company, headquartered in Rockville, MD, is a biopharmaceutical company. It is focused on discovering and developing innovative monoclonal antibody-based therapeutics. The company has a diverse portfolio of product candidates focused in three therapeutic areas: oncology, autoimmune disorders and infectious diseases.

The company has missed the Zacks Consensus Estimate in all the preceding four quarters, with an average negative earnings surprise of 12.70%.

The company is set to report third-quarter 2017 results on Nov 1. Currently, the company has an Earnings ESP of +9.59% and carries a Zacks Rank #3.

NeuroMetrix Inc. ( NURO ) - Neurometrix is a medical device company establishing a new standard of care through the design, development and sale of proprietary products used to diagnose neuropathies. Neuropathies are diseases of the peripheral nerves and parts of the spine that frequently are caused by or associated with diabetes, low back pain and carpal tunnel syndrome, as well as other clinical disorders.

The company has beaten the Zacks Consensus Estimate in three of the preceding four quarters, with an average negative earnings surprise of 8.93%.

This Zacks Rank #3 stock has an Earnings ESP of +8.57%. The company is expected to report third-quarter 2017 results on Oct 19.

Perrigo Company ( PRGO ) - Perrigo Company develops, manufactures and distributes healthcare products. The company operates primarily in four segments: Consumer Healthcare, Nutritionals, Rx Pharmaceutical and Active Pharmaceutical Ingredients. It also provides animal health products. The company operates primarily in the United States, the United Kingdom, Mexico, Israel, Australia, Canada, China and Latin America.

We note that the company has beaten the Zacks Consensus Estimate in three of the preceding four quarters, with an average positive earnings surprise of 13.11%.

The company is set to report third-quarter 2017 results on Nov 9. Currently, the company has an Earnings ESP of +1.35% and carries a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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